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Porter v. Wertz - 53 N.Y.2d 696, 439 N.Y.S.2d 105, 421 N.E.2d 500 (1981)

Rule:

U.C.C. § 2-403(1) incorporates the doctrines of estoppel, agency and apparent agency because it states that a purchaser acquires not only all title that his transferor had, but also all title that he had power to transfer.

Facts:

Plaintiffs were owners of a painting. They entrusted the painting to Harold Von Maker, an art merchant. Defendant Feigen Gallery purchased the painting from defendant Peter Wertz, an employee at a delicatessen that Von Maker frequented. Plaintiffs sued to recover possession of the painting or the value of it from defendants. Defendants asserted the affirmative defenses of statutory, U.C.C. § 2-403, and equitable estoppel. The trial court dismissed the complaint. The appellate division reinstated the complaint and directed entry of judgment in plaintiffs' favor and concluded that plaintiffs were not barred by either defense. Defendants sought review.

Issue:

Were the owners of a painting entrusted to a third party barred from recovery by the defense of statutory estoppel under U.C.C. §2-403, and equitable estoppel?

Answer:

No.

Conclusion:

The Court held that the Appellate Division properly concluded that plaintiffs were not barred from recovery by the defense of statutory estoppel (Uniform Commercial Code, § 2-403) since Wertz, the person from whom defendants purchased the painting, was not an art dealer, was not the same person to whom plaintiffs entrusted the painting and was not making the sale in the ordinary course of his business. The Court further held that the defendants were not entitled to rely on the defense of equitable estoppel, since Wertz had not been clothed by plaintiffs with any ownership or authority to transfer the painting, and plaintiffs did nothing to influence the art gallery’s decision to purchase the painting from Wertz.

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